Strategic Management and Core Competence

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CORE COMPETENCY
Group No.: 03 Members: 1. Ameet Shinde 2. Nilesh Bhusal

Ref: Article Core Competence by C.K. Prahalad

Core Competence is a skill/Asset/Technology that underpins the growth of the business and differentiates the business from its current and future Competitors OR Core competence is a bundle of skills and technologies that enables a company to provide a particular benefit to customers e.g. • Sony – benefit is pocketability core competence is miniaturization • Federal Express – benefit is on time delivery core competence is logistics management

The concept of core competencies was developed in the management field in1990 by C.K. Prahalad and Gary Hamel in the Harvard Business Review article titled “Core Competence of the Corporation”

Today’s corporation must maintain competitiveness by developing core competencies Portfolio of competencies instead of a portfolio of businesses i.e. SBU’s These competencies determine the strategic architecture of the firm In the long run, competitiveness derives from an ability to build the core competencies at lower cost and faster than competitors

The Diversified Corporation

Inside Outside Corporate Strategy
• The Outside-in approach (such as the Five Forces model from Porter) places the market, the competition, and the customer at the starting point of the strategy process • The Core Competence model does the opposite by stating that in the long run, competitiveness derives from an ability to build a Core Competence • Corporate strategy of a corporation should be built around a core of shared competences

• Core Competencies develops into core products

•From these core products come the new strategic business units. These SBU’s can be in completely separate markets

•These businesses each have end products that contain the core products

The core products are used to launch a variety of end products. For example, Honda

Variety of Markets

• What do miniature card...
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